The Party Is Over for Australia's $5.6 Trillion Housing Frenzy

Interesting piece from Bloomberg. Will RBA/APRA be able to engineer a "soft landing" or will the boom continue in Brisbane?

Love the part where the guy says "finally Australia is leading the world in something"

The Party Is Over for Australia's $5.6 Trillion Housing Frenzy

 

Interesting article, some comments are substantiated and others not. It's clearly biased though.

Some of the figures are quite concerning though. Anyone with a thorough understanding of economics want to weigh in on their evidence?

 

The article in the link has been discussed multiple times. Let's just say the analysis is incomplete. I found this to be a more thorough analysis:

The RBA may have to lift rates to manage debt risk -- but that could create an even bigger problem

This RBA Bulletin looks at household finances

https://www.rba.gov.au/publications/bulletin/2016/sep/3.html

 

Many thanks!

 

Sydney and Melbourne could be done.

How about Perth, Brisbane/Gold Coast and Hobart?

I would not say the perty is over but it could be moving states.

 

the frenzy is not over here,we are different in Australia,we got kangaroos and koalas here to protect us from crash

 

Oooooiiiiiiiiiiiiiiiiiiiiii you forgot VB too

 

After the party is the After-party! Go Brisbane!

 

I like that. And the after after-party could be Perth? Go Perth!

 

The guy speaking in the clip has been living in Loserville for too long. Dripping with envy and hatred. Makes me want to vomit.

 

I think everyone should think realistically about the role property and building industry plays in our current economy.

Think about the banks and how much they rely on lending, the insurance companies that then either insure the lending or insure the builders and other businesses that in one way or another are associated with building industry.

The trades, builders, electricians, plumbers, carpenters, brick layers etc etc.

The material production companies such as boral, austral, and the retailers like bunnings and in turn how they then produce income for the banking and insurance industry. Think about all the other businesses such as general retail, food etc that relied on this one sector to do well in order for money to change hands.

After the mining boom, the only reason why Australia didnt go into recession or even worse a depression was the production of building and investment. People think our other industries such as finance and insurance are doing well but they dont realize the reliance every single industry in Australia has on property sector.

If you take away or even shrink this sector by any amount that will have a direct and immediate impact on the economy.

It will be foolish to think Brisbane is going to pull the weight on national scale, I personally believe they wont even be able to pull their own weight. Its only a matter of time that unemployment will cause big problems over there.

We need NSW and Victoria to continue producing in property investment and building at least for the next decade until other parts of economy start doing better. Otherwise I have no doubt we will be heading for a recession.

 

Yeah, no..
From ABS

 

At @Tenex, that should a fairly easy to track with building approvals. ABS has a series for this. It's interesting to look at the state graphs. Perth had a mini boom ending in 2014. Building approvals were strong and growing up until 2014. The boom ended in 2014 and building approvals have dropped until recently along with prices. Building approvals have picked up recently, which may indicate the market is bottoming out, or may reflect increased FHB activity due to a $10,000 FHOG for new dwellings.



8731.0 - Building Approvals, Australia, Oct 2017

 

I wouldnt rely on those figures, they arn't worth the paper they are written on.

If ACT, a place where the biggest employer is federal government, is ahead of Victoria which is the second biggest economy in Australia then you can tell those figures arn't reliable. At least not to demonstrate the state of economic production any way.

If you want to understand the state of economy in Brisbane I suggest you google office vacancy rates the last quarter and the number of building companies that have gone bankrupted in 2017. Those two figures alone should tell you whats going on.

 

According to ASIC the number of companies entering into external admin correlates perfectly to population % by state.
Office vacancy only tells me the % offices vacant.. nothing more. There may be an oversupply of commercial real estate, but that doesn't mean companies are going belly up.
Beautiful one day, perfect the next as far as I can see in Bne

 

The spill over effects have effected my business so assuming all the related business (all of businesses) will be effected negatively as well. The vast majority of business owners I speak to are reporting significant impacts.

I think the worst is yet to come in the next 18 months in regards to the regulators interventions but perhaps we needed it???

 

I think what happens next will really be a function of how silly the decision makers at APRA, RBA and general state and federal politicians can get.

We needed to control the property market from very early on back in 2010 when interest rates started to go down.

Some soft measures should have been in place to control the level of growth of this sector while also trying to get other sectors up and running.

Instead the exact opposite of that happened in that no measure was in place to control property market and no measures were in place to make other parts of the economy independent.

Then obviously once they saw the result, they went into panic mode and started shooting themselves in the foot as hard as they could. What APRA is doing is an overkill, what state governments are doing to punish foreign buyers is unnecessary and all of it is a jerk reaction to their lack of action earlier on.

 

I agree and as time goes on some reversals may take place but nothing to radical Im imagining.

Will be interesting to see what part cryptocurrency will play in all of this.

 

Totally agree with this- as much as I love a good boom in this industry, I think it's important that the current line of regulation continues.

 

why would they do that if key politicians own multiple IPs?